Earlier today, Mayor Bowser and OSSE Director, Dr. Mitchell, delivered a presentation to the DC Council on the budget pressures facing the District this year (FY26) and across the financial plan, including pressures within the District’s Child Care Subsidy Program. Below is a statement from the Executive Committee of Under 3 DC:
“The Mayor’s child care subsidy presentation today poses a grave threat to the District’s early childhood education system – the families who depend on it, the educators who staff it, and the small business operators whose child care services make all other work possible. The Mayor’s FY26 budget proposal failed to account for basic programmatic cost drivers and drastically underfunded the District’s Child Care Subsidy Program, resulting in a roughly $32 million budget gap to support the more than 7,300 children currently enrolled. Instead of offering solutions to meet the District’s funding obligation – an obligation driven in part by federal requirements to maintain family enrollment for one year – the Mayor put forward paltry cost containment options that may limit the growth of the funding gap, but at the same time would permanently erode the District’s child care system.
“Cutting reimbursement rates paid to child care operators participating in the subsidy program would cripple their budgets and force classrooms and facilities to close, exacerbating the District’s shortage of early childhood education seats. Many child care businesses – especially those serving low-income families participating in the subsidy program – operate on razor-thin margins with little to no financial cushion. Proposed rate cuts of 2% to 8% represent a breaking point. These cuts would follow closely on the heels of roughly 5% pay cuts for early educators that took effect last month due to the Mayor’s and Council’s underfunding of the Pay Equity Fund. The cumulative impact would be devastating: programs will close, educators will leave the field, and children will lose access to the stable, high-quality care they need to thrive.
“Proposals to implement a waitlist or revise eligibility for the subsidy program would push new parents to leave jobs, reduce hours, or drop out of school. These outcomes undermine workforce participation and economic stability for District families.
“Today, 63% of the District’s child care providers accept subsidies, and nearly all operate mixed-delivery models, serving both subsidy-enrolled and private-pay families. Child care is a fixed-cost business: staffing, rent, utilities, food, and insurance do not shrink when reimbursement rates decrease or seats go unfilled. When enrollment freezes or waitlists leave seats vacant, programs must make up lost revenue elsewhere—by increasing tuition for private-pay families, who are already spending more than they can afford, or cutting services across the board through classroom closures that leave parents and children without care. The District has made meaningful progress in expanding supply, improving quality, and lifting the wages of early educators to drive those changes. Divesting now would undo years of investment and make it even harder for families to remain in the District. Preventing instability today is far less costly than rebuilding a collapsed system tomorrow.
“We call on the Administration and Council to make a clear commitment to fully funding the child care subsidy program – based on the true costs of delivering care – through FY26 and to work collaboratively with the early education community, including through a standard rulemaking and comment period process, to devise strategies to contain costs without destabilizing the entire system. The Administration’s lack of engagement with providers and families is deeply troubling. District leadership has known for at least six months that the subsidy program faces a multi-million-dollar shortfall, yet no meaningful engagement or impact analysis has occurred to assess the real-world consequences of the cost containment choices presented today. Child care operators and families must be involved in decision making and problem solving, otherwise we risk irrevocable harm to families, child care businesses, and the educational foundations of our children.”